Arkansas Short Term Rental Laws: AirBnB & Vacation Rental Regulations

Arkansas, often called “The Natural State,” is home to stunning national parks, vibrant college towns, and a growing tourism sector, making it an increasingly appealing market for short-term rental investments. From outdoor enthusiasts visiting the Ozarks to corporate travelers heading to Little Rock, there is a range of potential guests looking for unique stays. 

While Arkansas has relatively few statewide regulations on Airbnb and vacation rentals, local cities can impose their own ordinances and tax requirements. This article breaks down the basics of Arkansas’s short-term rental environment, explores how to start a rental business in the state, and highlights some of the key city regulations that hosts need to be aware of.

Arkansas’s Definition of a Short-Term Rental

Unlike some states that specify time limits (e.g., under 30 days or under 180 days), Arkansas does not have a one-size-fits-all definition of what constitutes a short-term rental at the state level. Instead, counties and municipalities often rely on local transient tax ordinances to determine how lodging is classified. Whether your guests stay for a weekend or a month, it’s wise to check your specific city or county’s rules to see if there are any relevant occupancy thresholds or licensing requirements.

On the state side, short-term rentals are generally treated like other lodging businesses for tax purposes. If you operate an Airbnb or similar property, you’ll need to understand how Arkansas’s sales and lodging taxes apply and stay up to date on any local add-on taxes.

Starting a Short-Term Rental Business in Arkansas

Typically, Arkansas does not require a specific short-term rental or “Airbnb” license at the state level. However, you may have to:

1. Register for Tax Purposes: Arkansas levies a state sales tax that can apply to short-term accommodations. If your booking platform does not automatically collect and remit this tax for you, you may need to register with the Arkansas Department of Finance and Administration (DFA).
2. Obtain a General Business License (If Required Locally): Some municipalities mandate that any business operating within city limits hold a general business license or permit. Hosts should confirm this requirement with their city clerk’s office.
3. Follow Local Ordinances: Municipalities may impose additional rules, such as noise restrictions, parking guidelines, or safety standards, to address the impact of short-term rentals on residential areas. It’s vital to research these local laws before accepting any guests.

Short-Term Rental Licensing Requirement in Arkansas

Arkansas does not have a statewide short-term rental license system. Instead, owners are expected to comply with basic state-level business registration and tax collection obligations—if those apply to their specific situation. The most common requirements come from:

• Sales Tax Collection: If you directly collect rent from guests and the platform does not remit taxes for you, you must obtain a tax account with the Arkansas DFA.
• Local Permits: Certain cities (especially those with high tourist traffic) may require a short-term rental permit or a standard business license. Rules vary by city, so always check official city or county websites for the latest information.

Arkansas Short-Term Rental Taxes

Hosts in Arkansas typically encounter a combination of taxes on nightly stays:

• State Sales Tax: Arkansas’s state sales tax rate is generally 6.5%. This tax often applies to short-term lodging, similar to hotels and motels.
• Local Sales/Hotel Tax: Cities, counties, or Advertising and Promotion Commissions can impose additional lodging or hospitality taxes, typically ranging from 1% to 4%.
• Filing Frequency: Depending on your average sales volume, you may need to file monthly, quarterly, or annually. If your booking platform collects and remits sales tax on your behalf, verify that it includes local rates as well as the state portion.

Make sure to keep accurate records of all rental income and fees to streamline the tax filing process. In areas where you must register independently, you can often apply for and manage your account through the Arkansas Taxpayer Access Point (ATAP) portal.

Vacation Rental Tax Deductions

Federal and potential state-level tax deductions can help Arkansas short-term rental operators maximize their net profits. If you rent out your property for more than 14 days a year and remain within IRS guidelines, you may be able to deduct:

• Mortgage interest and property taxes
• Insurance and maintenance costs
• Utilities, internet, and HOA fees
• Depreciation on furniture and the property itself
• Professional services like accounting or legal fees

Make sure to keep detailed records and consult the latest IRS rules or a tax professional to ensure you meet all requirements for these deductions.

Short-Term Rental Regulations by Major Locations in Arkansas

1. Little Rock

Little Rock, the state capital and largest city, treats short-term rentals similarly to other lodging operations in terms of tax collection. Although the city does not have a specific Airbnb ordinance, you may need a general business license if your property generates over a certain amount of annual revenue. In addition, the city enforces local zoning and nuisance regulations—so short-term rental hosts should monitor noise complaints, street parking rules, and trash disposal guidelines.

2. Fayetteville

Home to the University of Arkansas, Fayetteville experiences high demand for short-term rentals around sporting events and university functions. Fayetteville does not ban Airbnb but has considered stricter regulations in the past. Currently, hosts generally must adhere to local codes on occupancy and safety. The city also levies an Advertising and Promotion tax on lodging, in addition to the state sales tax. Host platforms may automatically collect these taxes, but verify whether you need to file independently.

3. Hot Springs

As a major tourist destination known for its thermal baths and scenic lakes, Hot Springs has implemented a 3% sales tax on lodging, on top of the state rate. Properties within city limits might need to comply with local business license requirements and pay an additional Advertising and Promotion tax. While short-term rentals are permitted, ensure your property adheres to any local building codes or safety inspections—particularly if it’s a historic home.

4. Bentonville

The home of Walmart’s corporate headquarters and a growing art scene, Bentonville is seeing an uptick in short-term rentals. Bentonville has not passed a distinct vacation rental ordinance, relying instead on existing zoning rules, hotel/lodging taxes, and city codes. Owners should confirm that their listings do not violate any homeowners association policies if located in planned neighborhoods. As tourism grows, new regulations or neighborhood restrictions may emerge, so it’s important to stay tuned to city announcements.

5. Eureka Springs

Eureka Springs is well-known for its Victorian architecture and vibrant tourism. The city imposes local taxes on lodging, alongside the state sales tax, and sometimes requires owners to register with local authorities if they operate a short-term lodging business. Due to the high concentration of historic properties, safety or preservation guidelines may be stricter than in other parts of Arkansas, so hosts should confirm local requirements before listing their property.

Takeaway

Arkansas provides a relatively open environment for short-term rental hosts, with minimal statewide restrictions beyond tax collection obligations. While this flexibility can be attractive for investors, the patchwork of local regulations means you’ll need to do your homework in each city or county where you operate. Always confirm whether a general business license is necessary, what local lodging or advertising taxes apply, and how to remain compliant with residential zoning or noise ordinances.

With due diligence and proper adherence to local rules, owning a short-term rental in Arkansas can be a profitable venture—allowing you to tap into the state’s mixture of scenic beauty, college-town energy, and cultural tourism. As always, keep an eye on local legislative developments to stay informed about any changes that could affect short-term rentals in your area.